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AN ACT relating to a deduction for union dues. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 141.019 is amended to read as follows: 3
In the case of taxpayers other than corporations: 4
(1) Adjusted gross income shall be calculated by subtracting from the gross income of 5
those taxpayers the deductions allowed individuals by Section 62 of the Internal 6
Revenue Code and adjusting as follows: 7
(a) Exclude income that is exempt from state taxation by the Kentucky 8
Constitution and the Constitution and statutory laws of the United States; 9
(b) Exclude income from supplemental annuities provided by the Railroad 10
Retirement Act of 1937 as amended and which are subject to federal income 11
tax by Pub. L. No. 89-699; 12
(c) Include interest income derived from obligations of sister states and political 13
subdivisions thereof; 14
(d) Exclude employee pension contributions picked up as provided for in KRS 15
6.505, 16.545, 21.360, 61.523, 61.560, 65.155, 67A.320, 67A.510, 78.610, 16
and 161.540 upon a ruling by the Internal Revenue Service or the federal 17
courts that these contributions shall not be included as gross income until such 18
time as the contributions are distributed or made available to the employee; 19
(e) Exclude Social Security and railroad retirement benefits subject to federal 20
income tax; 21
(f) Exclude any money received because of a settlement or judgment in a lawsuit 22
brought against a manufacturer or distributor of "Agent Orange" for damages 23
resulting from exposure to Agent Orange by a member or veteran of the 24
Armed Forces of the United States or any dependent of such person who 25
served in Vietnam; 26
(g) 1. a. For taxable years beginning after December 31, 2005, but before 27 UNOFFICIAL COPY 25 RS BR 1257
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January 1, 2018, exclude up to forty-one thousand one hundred ten 1
dollars ($41,110) of total distributions from pension plans, annuity 2
contracts, profit-sharing plans, retirement plans, or employee 3
savings plans; and 4
b. For taxable years beginning on or after January 1, 2018, exclude 5
up to thirty-one thousand one hundred ten dollars ($31,110) of 6
total distributions from pension plans, annuity contracts, profit-7
sharing plans, retirement plans, or employee savings plans. 8
2. As used in this paragraph: 9
a. "Annuity contract" has the same meaning as set forth in Section 10
1035 of the Internal Revenue Code; 11
b. "Distributions" includes but is not limited to any lump-sum 12
distribution from pension or profit-sharing plans qualifying for the 13
income tax averaging provisions of Section 402 of the Internal 14
Revenue Code; any distribution from an individual retirement 15
account as defined in Section 408 of the Internal Revenue Code; 16
and any disability pension distribution; and 17
c. "Pension plans, profit-sharing plans, retirement plans, or employee 18
savings plans" means any trust or other entity created or organized 19
under a written retirement plan and forming part of a stock bonus, 20
pension, or profit-sharing plan of a public or private employer for 21
the exclusive benefit of employees or their beneficiaries and 22
includes plans qualified or unqualified under Section 401 of the 23
Internal Revenue Code and individual retirement accounts as 24
defined in Section 408 of the Internal Revenue Code; 25
(h) 1. a. Exclude the portion of the distributive share of a shareholder's net 26
income from an S corporation subject to the franchise tax imposed 27 UNOFFICIAL COPY 25 RS BR 1257
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under KRS 136.505 or the capital stock tax imposed under KRS 1
136.300; and 2
b. Exclude the portion of the distributive share of a shareholder's net 3
income from an S corporation related to a qualified subchapter S 4
subsidiary subject to the franchise tax imposed under KRS 5
136.505 or the capital stock tax imposed under KRS 136.300. 6
2. The shareholder's basis of stock held in an S corporation where the S 7
corporation or its qualified subchapter S subsidiary is subject to the 8
franchise tax imposed under KRS 136.505 or the capital stock tax 9
imposed under KRS 136.300 shall be the same as the basis for federal 10
income tax purposes; 11
(i) Exclude income received for services performed as a precinct worker for 12
election training or for working at election booths in state, county, and local 13
primaries or regular or special elections; 14
(j) Exclude any capital gains income attributable to property taken by eminent 15
domain; 16
(k) 1. Exclude all income from all sources for members of the Armed Forces 17
who are on active duty and who are killed in the line of duty, for the 18
year during which the death occurred and the year prior to the year 19
during which the death occurred. 20
2. For the purposes of this paragraph, "all income from all sources" shall 21
include all federal and state death benefits payable to the estate or any 22
beneficiaries; 23
(l) Exclude all military pay received by members of the Armed Forces while on 24
active duty; 25
(m) 1. Include the amount deducted for depreciation under 26 U.S.C. sec. 167 26
or 168; and 27 UNOFFICIAL COPY 25 RS BR 1257
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2. Exclude the amounts allowed by KRS 141.0101 for depreciation; 1
(n) Include the amount deducted under 26 U.S.C. sec. 199A; 2
(o) Ignore any change in the cost basis of the surviving spouse's share of property 3
owned by a Kentucky community property trust occurring for federal income 4
tax purposes as a result of the death of the predeceasing spouse; 5
(p) Allow the same treatment allowed under Pub. L. No. 116-260, secs. 276 and 6
278, related to the tax treatment of forgiven covered loans, deductions 7
attributable to those loans, and tax attributes associated with those loans for 8
taxable years ending on or after March 27, 2020, but before January 1, 2022;[ 9
and] 10
(q) For taxable years beginning on or after January 1, 2020, but before March 11, 11
2023, allow the same treatment of restaurant revitalization grants in 12
accordance with Pub. L. No. 117-2, sec. 9673 and 15 U.S.C. sec. 9009c, 13
related to the tax treatment of the grants, deductions attributable to those 14
grants, and tax attributes associated with those grants; and 15
(r) 1. a. For taxable years beginning on or after January 1, 2026, but 16
before January 1, 2030, exclude professional membership dues 17
and union dues paid during the taxable year and not deducted 18
under Section 162 of the Internal Revenue Code; and 19
b. As used in this paragraph: 20
i. "Professional membership dues" means the total amount 21
of dues, fees, assessments, or other charges or expenses 22
required of members to maintain their professional license 23
or association membership related to his or her 24
employment; and 25
ii. "Union dues" means the total amount of dues, fees, 26
assessments, or other charges or expenses required of 27 UNOFFICIAL COPY 25 RS BR 1257
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members of or public employees represented by a labor 1
organization. 2
2. a. In order for the General Assembly to evaluate this exclusion, the 3
department shall report the following information to the 4
Legislative Research Commission and the Interim Joint 5
Committee on Appropriations and Revenue on or before 6
November 1, 2027, and on or before each November 1 thereafter 7
as long as the exclusion is claimed on any return filed: 8
i. The number of returns claiming the exclusion for each 9
taxable year; 10
ii. The total amount of the exclusions claimed and the total 11
amount of the reduced tax liability for each taxable year; 12
and 13
iii. Based on ranges of adjusted gross income of no larger than 14
five thousand dollars ($5,000), the total amount of the 15
reduced tax liability for each adjusted gross income range 16
for each taxable year. 17
b. The information required to be reported under this section shall 18
not be considered confidential taxpayer information and shall 19
not be subject to KRS Chapter 131 or any other provisions of the 20
Kentucky Revised Statutes prohibiting disclosure or reporting of 21
information; and 22
(2) Net income shall be calculated by subtracting from adjusted gross income all the 23
deductions allowed individuals by Chapter 1 of the Internal Revenue Code, as 24
modified by KRS 141.0101, except: 25
(a) Any deduction allowed by 26 U.S.C. sec. 164 for taxes; 26
(b) Any deduction allowed by 26 U.S.C. sec. 165 for losses, except wagering 27 UNOFFICIAL COPY 25 RS BR 1257
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losses allowed under Section 165(d) of the Internal Revenue Code; 1
(c) Any deduction allowed by 26 U.S.C. sec. 213 for medical care expenses; 2
(d) Any deduction allowed by 26 U.S.C. sec. 217 for moving expenses; 3
(e) Any deduction allowed by 26 U.S.C. sec. 67 for any other miscellaneous 4
deduction; 5
(f) Any deduction allowed by the Internal Revenue Code for amounts allowable 6
under KRS 140.090(1)(h) in calculating the value of the distributive shares of 7
the estate of a decedent, unless there is filed with the income return a 8
statement that the deduction has not been claimed under KRS 140.090(1)(h); 9
(g) Any deduction allowed by 26 U.S.C. sec. 151 for personal exemptions and 10
any other deductions in lieu thereof; 11
(h) Any deduction allowed for amounts paid to any club, organization, or 12
establishment which has been determined by the courts or an agency 13
established by the General Assembly and charged with enforcing the civil 14
rights laws of the Commonwealth, not to afford full and equal membership 15
and full and equal enjoyment of its goods, services, facilities, privileges, 16
advantages, or accommodations to any person because of race, color, religion, 17
national origin, or sex, except nothing shall be construed to deny a deduction 18
for amounts paid to any religious or denominational club, group, or 19
establishment or any organization operated solely for charitable or educational 20
purposes which restricts membership to persons of the same religion or 21
denomination in order to promote the religious principles for which it is 22
established and maintained; and 23
(i) A taxpayer may elect to claim the standard deduction allowed by KRS 24
141.081 instead of itemized deductions allowed pursuant to 26 U.S.C. sec. 63 25
and as modified by this section. 26
Section 2. KRS 131.190 is amended to read as follows: 27 UNOFFICIAL COPY 25 RS BR 1257
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(1) No present or former commissioner or employee of the department, present or 1
former member of a county board of assessment appeals, present or former property 2
valuation administrator or employee, present or former secretary or employee of the 3
Finance and Administration Cabinet, former secretary or employee of the Revenue 4
Cabinet, or any other person, shall intentionally and without authorization inspect 5
or divulge any information acquired by him or her of the affairs of any person, or 6
information regarding the tax schedules, returns, or reports required to be filed with 7
the department or other proper officer, or any information produced by a hearing or 8
investigation, insofar as the information may have to do with the affairs of the 9
person's business. 10
(2) The prohibition established by subsection (1) of this section shall not extend to: 11
(a) Information required in prosecutions for making false reports or returns of 12
property for taxation, or any other infraction of the tax laws; 13
(b) Any matter properly entered upon any assessment record, or in any way made 14
a matter of public record; 15
(c) Furnishing any taxpayer or his or her properly authorized agent with 16
information respecting his or her own return; 17
(d) Testimony provided by the commissioner or any employee of the department 18
in any court, or the introduction as evidence of returns or reports filed with the 19
department, in an action for violation of state or federal tax laws or in any 20
action challenging state or federal tax laws; 21
(e) Providing an owner of unmined coal, oil or gas reserves, and other mineral or 22
energy resources assessed under KRS 132.820, or owners of surface land 23
under which the unmined minerals lie, factual information about the owner's 24
property derived from third-party returns filed for that owner's property, under 25
the provisions of KRS 132.820, that is used to determine the owner's 26
assessment. This information shall be provided to the owner on a confidential 27 UNOFFICIAL COPY 25 RS BR 1257
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basis, and the owner shall be subject to the penalties provided in KRS 1
131.990(2). The third-party filer shall be given prior notice of any disclosure 2
of information to the owner that was provided by the third-party filer; 3
(f) Providing to a third-party purchaser pursuant to an order entered in a 4
foreclosure action filed in a court of competent jurisdiction, factual 5
information related to the owner or lessee of coal, oil, gas reserves, or any 6
other mineral resources assessed under KRS 132.820. The department may 7
promulgate an administrative regulation establishing a fee schedule for the 8
provision of the information described in this paragraph. Any fee imposed 9
shall not exceed the greater of the actual cost of providing the information or 10
ten dollars ($10); 11
(g) Providing information to a licensing agency, the Transportation Cabinet, or 12
the Kentucky Supreme Court under KRS 131.1817; 13
(h) Statistics of gasoline and special fuels gallonage reported to the department 14
under KRS 138.210 to 138.448; 15
(i) Providing any utility gross receipts license tax return information that is 16
necessary to administer the provisions of KRS 160.613 to 160.617 to 17
applicable school districts on a confidential basis; 18
(j) Providing documents, data, or other information to a third party pursuant to an 19
order issued by a court of competent jurisdiction; 20
(k) Publishing administrative writings on its official website in accordance with 21
KRS 131.020(1)(b); or 22
(l) Providing information to the Legislative Research Commission under: 23
1. KRS 139.519 for purposes of the sales and use tax refund on building 24
materials used for disaster recovery; 25
2. KRS 141.436 for purposes of the energy efficiency products credits; 26
3. KRS 141.437 for purposes of the ENERGY STAR home and the 27 UNOFFICIAL COPY 25 RS BR 1257
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ENERGY STAR manufactured home credits; 1
4. KRS 141.383 for purposes of the film industry incentives; 2
5. KRS 154.26-095 for purposes of the Kentucky industrial revitalization 3
credit[tax credits] and the job assessment fees; 4
6. KRS 141.068 for purposes of the Kentucky investment fund; 5
7. KRS 141.396 for purposes of the angel investor [tax ]credit; 6
8. KRS 141.389 for purposes of the distilled spirits credit; 7
9. KRS 141.408 for purposes of the inventory credit; 8
10. KRS 141.390 for purposes of the recycling and composting 9
credits[credit]; 10
11. KRS 141.3841 for purposes of the selling farmer [tax ]credit; 11
12. KRS 141.4231 for purposes of the renewable chemical production [tax 12
]credit; 13
13. KRS 141.524 for purposes of the Education Opportunity Account 14
Program [tax ]credit; 15
14. KRS 141.398 for purposes of the development area [tax ]credit; 16
15. KRS 139.516 for [the ]purposes of the sales and use tax exemptions 17
for[exemption on] the commercial mining of cryptocurrency; 18
16. KRS 141.419 for purposes of the decontamination [tax ]credit; 19
17. KRS 141.391 for purposes of the qualified broadband investment [tax 20
]credit;[ and] 21
18. KRS 139.499 for purposes of the sales and use tax 22
exemptions[exemption] for a qualified data center project; and 23
19. Section 1 of this Act for purposes of the individual income tax 24
exclusion for union and professional membership dues. 25
(3) The commissioner shall make available any information for official use only and on 26
a confidential basis to the proper officer, agency, board or commission of this state, 27 UNOFFICIAL COPY 25 RS BR 1257
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any Kentucky county, any Kentucky city, any other state, or the federal 1
government, under reciprocal agreements whereby the department shall receive 2
similar or useful information in return. 3
(4) Access to and inspection of information received from the Internal Revenue Service 4
is for department use only, and is restricted to tax administration purposes. 5
Information received from the Internal Revenue Service shall not be made available 6
to any other agency of state government, or any county, city, or other state, and 7
shall not be inspected intentionally and without authorization by any present 8
secretary or employee of the Finance and Administration Cabinet, commissioner or 9
employee of the department, or any other person. 10
(5) Statistics of crude oil as reported to the department under the crude oil excise tax 11
requirements of KRS Chapter 137 and statistics of natural gas production as 12
reported to the department under the natural resources severance tax requirements 13
of KRS Chapter 143A may be made public by the department by release to the 14
Energy and Environment Cabinet, Department for Natural Resources. 15
(6) Notwithstanding any provision of law to the contrary, beginning with mine-map 16
submissions for the 1989 tax year, the department may make public or divulge only 17
those portions of mine maps submitted by taxpayers to the department pursuant to 18
KRS Chapter 132 for ad valorem tax purposes that depict the boundaries of mined-19
out parcel areas. These electronic maps shall not be relied upon to determine actual 20
boundaries of mined-out parcel areas. Property boundaries contained in mine maps 21
required under KRS Chapters 350 and 352 shall not be construed to constitute land 22
surveying or boundary surveys as defined by KRS 322.010 and any administrative 23
regulations promulgated thereto. 24